FUND management firm BlackRock was yesterday hit by a £9.5m fine for lapses in its deposit protection procedures.
The Financial Services Authority (FSA) said that the firm failed to put trust letters in place for certain money market deposits and did not “take reasonable care” to identify and protect client money lodged with third party banks.
UK rules state that firms must have a trust letter from any bank holding its client money to ensure that client money is clearly identifiable and is ring-fenced.
Between October 2006 and March 2010, BlackRock Investment Management failed to obtain such letters. The average daily balance affected by this was over £1.36bn.
The errors stemmed from a change of systems following BlackRock’s acquisition of the business, which was previously known as Merrill Lynch Investment Managers.
In a statement BlackRock said: “The situation that led to this settlement was not deliberate and no clients suffered any losses as a result of the error.
“Still, we regret this instance where our UK procedures regarding money market deposits for a number of our clients were not consistent with applicable standards, and we are pleased to have fully resolved this matter with the FSA and that the matter is now closed.”